HispanicBusiness

The International Monetary Fund on Monday pared back its forecast for global economic growth in 2012-13, while warning that risks "continue to loom large."

For this year, the Washington-based crisis lender trimmed its global forecast - last issued in January - by 0.1 percentage points to 3.5 percent, while cutting its 2013 projection by 0.2 points to 3.9 percent.

With the eurozone facing recession and the United States stuck in slow growth, major emerging economies including China, India and Brazil are slowing down more than expected, the IMF found.

"The most immediate risk is still that delayed or insufficient policy action will further escalate the euro crisis," the IMF report said. "The situation in the euro area crisis economies will likely remain precarious until all policy action needed for resolution of the crisis has been taken."

The report left eurozone gross domestic product at a contraction of 0.3 percent this year but trimmed 2013 growth by 0.2 points to 0.7 percent.

Germany, the currency area's largest economy, was forecast to gain 0.4 points to 1 percent growth this year, but for 2013 was pared by 0.1 points to 1.4 percent.

Agreements last month by eurozone leaders including moves toward unified banking supervision were "steps in the right direction," the IMF said. "But further steps are needed."

Europe-wide deposit insurance and a unified process to unwind failed banks were still needed, along with "timely implementation" of the eurozone's permanent bailout fund, which is still to be ratified by some members.

The IMF also called for plans to move eurozone governments toward budgetary integration.

The lender reiterated its longstanding call for governments across Europe to make their economies more competitive. In the past it has urged measures such as privatizations, labour market liberalization and lowered hurdles for business creation.

"The viability of the monetary union must also be supported by wide-ranging structural reforms throughout the euro area to raise growth," the IMF said.

The European Central Bank, which has already loosened monetary policy in recent weeks, has "room ... to ease further," the IMF said.

The 2012-13 projection for global inflation was 3 to 3.5 percent, a dip from about 4.5 percent in late 2011.

The IMF said that the first quarter of 2012 was a little stronger than expected, with a surge in industrial production and global trade benefiting export-oriented economies, especially Germany and Japan.

But the second quarter was worse than expected, with job creation "hampered" in advanced economies.

The US "fiscal cliff," in which current law would slash the federal budget deficit by 4 percent of gross domestic product in 2013 through sharp spending cuts and major tax hikes, would stall US growth with "significant spillovers to the rest of the world," the IMF said.

The report was based on the assumption that Congress would act to reduce the "excessive fiscal tightening," while the IMF urged "more credible" medium-term plans to bring both US and Japanese deficits under control.

US growth was cut by 0.1 points to 2 percent this year and 2.3 percent in 2013.

Japan's growth was hiked by 0.4 points to 2.4 percent in 2012 but reduced by 0.2 points to 1.5 percent next year.

In other regions, the IMF projected:

- Central and Eastern Europe would remain at 1.9 percent growth this year, while paring back 2013 growth by 0.1 points to 2.8 percent.

- Russia would remain at 4 percent growth this year, while cutting back 2013 growth by 0.1 points to 3.9 percent.

- China would still grow by 8 percent or more in 2012-13.

- India would still grow by 6 percent or more in 2012-13.

- Latin America and the Caribbean growth was pared back for 2012 by 0.3 points to 3.4 percent, while the 2013 growth projection was hiked by 0.1 points to 4.2 per cent.

- Faster growth in the Middle East and North Africa of 1.3 points to 5.5 percent this year, while leaving the 2013 projection at 3.7 per cent.